Gold price stuck at 5 year lows, further downsides likely

Otmane El Rhazi from The Bullion Desk.

The gold price was marginally higher during Thursday sessions but the yellow metal is still looking weak and sentiment remains poor.

Spot gold was last at $1,097.80/1,098.80 per ounce, a $3 increase on the previous day’s close but remaining under $1,100 having fallen yesterday to a fresh five year low of $1,087.

Participants believe that the metal could see further lows, as gold has fallen firmly out of favour with investors.

“The benchmark 30-member Philadelphia stock exchange gold and silver index is at its lowest levels since 2001. A five-day losing streak through Monday wiped $19 billion from the index,” ANZ noted.

 “Given the weakening of the US dollar earlier this week did not help gold and silver to push higher from their lows, we believe that both metals are vulnerable to further downside in the short-term, driven by higher US real interest rates and positive developments in Greece  which reduces safe-haven demand,” FastMarkets analyst Boris Mikanikrezai said

Meanwhile, weak oil prices are also adding to the downbeat sentiment, oil prices fell following a rise in US weekly inventory data, crude was last at $49.25 and brent at $56.04

“One negative for gold is oil, a complex which we think could be the next to give way and perhaps generate a negative the back loop given that support at around the mid-$49/barrel mark (basis WTI) has given way,” said INTL FCStone analyst Edward Meir.

Silver at $14.81/14.86 was little changed from the previous close of $14.79. Platinum at $983/988 was up $2 and palladium at $632/637 was down $2. 

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